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ALL INDIA INSTALLED CAPACITY

Tuesday, September 6, 2011

Price of power

Although electricity consumers have to go through long hours of power cuts in India during summer, power shortages never become a political issue. A popular misconception is that consumers worry about cost rather than the quality of power supply. Perhaps, that is the reason state governments are reluctant to let their utilities revise tariffs, even if it hurts discoms’ future ability to meet power requirements.

However, this perception about consumers’ preference seems to be more of a myth than a reality if we are to believe the findings of a consumer preference survey done by Mercom Capital Group, an energy sector market intelligence provider.

“Our survey revealed a surprisingly high acceptance to paying more for electricity, if power cuts could be avoided. This is a very positive finding for utilities that are losing money every year due to low power prices,” Mercom said in its findings report on “India Renewable Energy Awareness Survey” conducted face-to-face on 509 respondents in Karnataka.

“A majority of 65% of surveyed respondents said they were willing to pay higher electricity rates if provided 24 hours of uninterrupted power without rolling blackouts or brownouts. To the question, 62% of rural respondents said yes and 56% of residential respondents said yes, while about 76% of commercial/industrial respondents said yes or maybe. (The 32%of maybe among commercial and industrial respondents was due to the fact that they had already made significant investments into installing backup generators),” the report said.

“In following up to our question of how much more were survey respondents willing to pay for 24 hours of uninterrupted power per month: about 56% of commercial and industrial respondents were willing to pay R100-5,000 more for electricity, about 56% of residential respondents were also willing to pay R0-500 more for electricity, 60% of rural respondents were willing to pay R0-100 more,” Mercom said.

Almost 61% of the surveyed respondents said their electricity rates were either fair or low. About 65% of residential respondents said their rates were low or fair, whereas about 61% of commercial/industrial respondents said their electricity rates were fair. Surprisingly about 53% of rural respondents also said their electricity rates were low or fair.

“This is a significant finding as electricity rates in India are subsidised and are low due to that most government run power utilities run at a loss. This is also an indication that power utilities have room to raise rates as public opinion supports it,” the report said.

According to Mercom, the survey was conducted in the areas around Bangalore and Mysore cities. It also included villages like Akkihebbal, Sindhugatta, Balagatta and Vasanthapura. Residential areas covered under the survey were Bangalore-Basaveshwaranagar, Mysore-Yadavagiri, T.K. Layout, Bogadi and Bamboo Bazaar.

Bangalore—Rajajinagar, Yeshwanthpur, Shivananda Circle, Seshadripuram and Peenya, Mysore—Hebbal, Belavadi and Metagalli were the key industrial and commercial areas surveyed by Mercom. Some 101 rural, 204 residential and 204 commercial and industrial respondents were covered under the survey.

Mercom conducted the survey recently to assess consumer attitudes and awareness of the renewable energy and power sectors in India. “Overall, we found a general lack of education and understanding about renewable energy, though the people surveyed were very enthusiastic about renewable energy concepts. Respondents were more aware of solar than other renewable energy technologies, though this was primarily due to awareness of solar water heaters. Awareness of wind energy was surprisingly low. Awareness of energy efficiency and the BEE Star label was especially low,” the report said.

“Governments have a responsibility to communicate and educate their constituents about subsidy programmes and policies, while renewable energy industry participants need to educate communities before and during project development, in order to achieve community ‘buy-in’ and avoid potential backlash.

The cost of energy conservation is substantially cheaper than adding new power capacity, however education and communication programmes among the population are vital if energy efficiency goals are to be achieved.

“It is easier to develop a renewable energy project on a land close to population centres if you have already communicated and educated people about the benefits that renewable energies bring to communities without facing obstructions to these projects because of misconceptions. In one of the villages we surveyed, Akkihebbal, the population was extremely receptive to renewable energy as they already had a positive experience with solar lights installed under a government programme, and clearly understood the good that renewable energy could bring to their communities,” the report said.